The ACA to Ignite the American Dream: Entrepreneurship

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By Adrienne Sheares - Community Manager & Digital Strategist at Young Invincibles

“I think I want to try working for myself full-time,” I excitedly confessed to my mom after completing my first freelance project. Like many of my peers, I turned to entrepreneurship to avoid being stuck on the serial internship track that became a booming industry, thanks to the recession. To say my mom’s reaction to my announcement was less that enthusiastic was an understatement. She immediately bombarded me with millions of questions, the majority of which were related to my health care options.

It’s not that she didn’t support my dreams, but like many, she was wary of entrepreneurship because of the lack of affordable health care options for individuals.  Thankfully, I was able to land a job in my field at Young Invincibles, easing my mom’s worries.

However, with the Affordable Care Act taking full effect in 2014, I couldn’t help wondering what impact it would have on the amount of people who pursue entrepreneurship.

Studies have shown that the ACA could lead to at least a 33% increase in the number of new businesses over the next few years.

Why?

  • Well, instead of shopping around for expensive individual plans, you will have the opportunity to purchase from those health plans on the new insurance marketplace – and get tax credits to help you buy that plan while your business gets off the ground.
  • In fact, if you’re working from the ground up and starting with no income at all, you can enroll in free health insurance through Medicaid in many states.
  • Just like if you were to opt into your employer’s plan, the plans sold on the marketplace will have to meet basic standards for cost and coverage.  All plans will have to cover 10 categories of “essential health benefits,” and certain preventive services at no additional cost.
  • Before the ACA, if you, your partner or your children had a pre-existing condition like asthma or diabetes, finding affordable health insurance outside of your employer was an expensive nightmare. Starting in 2014, insurers cannot deny coverage to individuals with pre-existing conditions or charge them more for it.

What does all this mean?

Thanks to the ACA, this means people will be able to work for themselves without worrying that they won’t be able to find or afford health insurance.  Now that you know you can get affordable health coverage, what’s stopping you from executing that great idea?

Guest Post: On Being Young and Wanting Health Insurance

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Originally posted by Malik Hassan on BET’s Men’s Health Week Blog.

I’m a 24-year-old server and bartender in Philadelphia, an uncle, and a father figure to my sister’s three children. And I’m one of the millions of young Americans who can’t afford health insurance.

Until recently, that never struck me as a big deal. When you’re young and healthy, you don’t really think about health insurance — or at least you don’t think about it until something goes wrong and you need it.

Not too long ago, I hurt my foot pretty badly and thought that I may have fractured a bone. It was the sort of injury that if I had insurance I would’ve gotten checked out, but since I wasn’t covered and couldn’t afford to go see a doctor, I ended up just working through the pain.

That experience made me think about the consequences that a really serious accident could have on the rest of my life. Without insurance, one injury could just turn my future upside down.

That’s why I’m looking forward to the new Health Insurance Marketplaces being created thanks to the health care law. This October, I’ll be one of the people checking out affordable health plans on HealthCare.gov. I’ll figure out which plan is the best fit for me and for my wallet, and I’ll find out if I can get additional help covering costs from the new tax credits the law is making available.

Having health insurance is all about peace of mind — it means somebody’s got your back in case anything happens to you. And having that worry off my shoulders is going to make things so much easier for me as I work toward my goals, whether that ends up meaning going back to school or maybe looking for a better job.

Just because I’m young and healthy now doesn’t mean I shouldn’t be looking out for my future. That’s why I’ll be visiting the Marketplace on October 1 to choose a health insurance plan.

You can learn more about the Marketplace and what you need to do to prepare for October.

Guest Post: Social Media Day of Action on Student Debt: DON’T DOUBLE MY RATE!!

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Originally posted by I AM NOT A LOAN.

We’re partnering with Young Invincibles today to flood social media outlets with one unifying message: Don’t Double My Rate!

Time is running out! On July 1, student loan interest rates will double if Congress doesn’t do anything to stop it. This means that college will become even more expensive, and students will incur more debt by having to pay 6.8% interest on their subsidized federal loans.

Higher education is already expensive enough, and there are solutions out there that can stop interest rates from doubling. It’s up to students to call on their members of Congress to act immediately and pass legislation that is good for students — such as the Student Loan Affordability Act which would keep student loan interest rates low for another two years (supported by Sens. Reed, Harkin, Reid, Murray — and Sen. Warren is a co-sponsor).

Your senators and representatives are elected to speak up for what’s important to you, so make your voice heard and tell them “Don’t Double My Rate!” by participating in today’s Social Media Day of Action.

Here’s what you can do:

1.  Post messages and updates to your Facebook and Twitter account about why this issue matters to you, and make sure you use the hashtags #DontDoubleMyRate and #DreamsNotDebt. Here are some samples:

–Click here to post a message on Facebook

–Click here to tweet about the campaign to your followers

2.  Write to your members of Congress using this tool and tell them to support the Student Loan Affordability Act.  Senators and Congressmen need to act quickly to keep student loan interest rates from doubling.

3.  Sign this petition and share your story about why it’s important to keep college affordable.

Federal student loans are supposed to help more students access higher education in an affordable, manageable way. Student loan debt should not become such a burden that it prevents graduates from pursuing their dreams or putting off decisions like buying homes and cars.

Want to do more? Head on over to the Young Invincible’s website and see what else you can do to make this Social Media Day of Action an even greater success!

Cross-posted at Daily Kos.

Paying (Even) More for Your Dreams

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By Konrad Mugglestone – Public Policy Fellow at Young Invincibles

So you’ve gotten into your dream school; maybe you’ve completed a few semesters of classes. You’re working on acquiring the degree that everyone has said is the key to your fruitful future.  You’re probably looking forward to graduation and being on the road to financial independence.

Yes, the future looks bright for you… once you pay off that degree you’re working on.

Oh, and by the way, if Congress fails to act by July 1st, you’ll be paying even more than you had planned.

(Watch YI’s video on the potential student interest rate hike here)

If you know anyone who graduated this year, then you know someone who is a member of the most indebted class ever. On average, members of the Class of 2013 who had to borrow money for school just graduated with $30,000 in debt!  With that same amount of money you could buy a brand new (luxury) car or make a sizable down payment on your first house. (Or many, many burritos.  Check out our student debt calculator).

If history is any judge, however, you and your classmates are likely to beat them.

If that weren’t enough, this number will shoot even higher if Congress does nothing to stop interest rates on popular federally subsidized Stafford loans from automatically doubling this year from 3.4% to 6.8%.

For about 7 million borrowers, each year of education funded by the maximum amount of federal loans will cost an extra $1,000.

But you don’t have to take this lying down. Stand up and act. Let Congress know that the best way to close the deficit is not through overburdening those who are striving to become the engines for American economic growth and recovery with added debt, as some proposals out there do.  And let them know that letting rates double is the wrong direction for this generation.

Be sure to join Young Invincibles today for Social Media Day of Action. Tell Congress what you think using #DreamsNotDebt, and #DontDoubleMyRate.

Sign our petition to make your voice heard!

Like and follow Young Invincibles on Facebook and Twitter. 

Guest Post: The Student Debt Crisis is Everyone’s Problem

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Originally posted by Robert Applebaum of StudentDebtCrisis.org in The Nation.

With interest rates on federally subsidized Stafford Loans set to double on July 1, from 3.4 percent to 6.8 percent, student debt has finally started getting the attention it deserves.  Unfortunately, most of the coverage of the metastasizing student debt crisis fails to take note that the fight over interest rates is but one small battle in the overall war against exponentially mounting student debt.

Senator Elizabeth Warren recently introduced her first piece of stand-alone legislation, the “Bank on Students Loan Fairness Act” which would set interest rates on federally subsidized Stafford loans at .75 percent, the same rate at which the big banks are able to borrow at the Federal Reserve’s discount window.  According to Senator Warren, if we as a society deem it so vital to our economy that we need to subsidize the big banks that nearly destroyed our economy, then what is the rationale for charging students a rate nine times higher simply to obtain an education?

We’ve lost sight of the fact that higher education is not a product but rather both a public good and an investment in our collective future. How are we ever to compete on the global stage in the new, 21st century economy if we’re saddling our best and brightest with mortgage-sized debts just as they’re starting out in life?  What most media coverage fails to emphasize is that a well-educated workforce benefits everybody, not just the individuals obtaining the educations in question.

The debate over interest rates for federal student loans is not unimportant but only concerns current and future students and, therefore, legislation like Warren’s does nothing to address the more than $1.1 trillion in outstanding student debt that is collectively owed by more than 39 million Americans – nearly 60 percent of which, by the way, is owed by people over the age of 30, demonstrating beyond doubt that the issue of student debt is not just a young person’s problem – it’s everyone’s problem.

When the housing market crashed, you didn’t need to own a home to be affected by damage it did to the economy.  The same can be said for student debt.  The effects of this massive drag on the economy can be felt down the line – from auto manufacturers and dealers, to homebuilders and realtors.  If you own a small business, your bottom line is affected by the fact that 39 million Americans simply do not have the disposable income necessary to purchase goods or services.  And the problem is only getting worse.

While it’s important to stand in solidarity with current and future students to ensure that we never reach the $2 trillion mark, there is so much more that is needed to be done to address the existing $1.1 trillion that has already been accrued.  There’s no shortage of good ideas, but there is a serious dearth of political will to lend a helping hand to the millions of Americans who did absolutely nothing wrong, other than seek to better themselves and to better contribute to society by seeking out a higher education.

First and foremost, basic consumer protections, such as bankruptcy rights and statutes of limitations on the collections of student debt must be restored.  There is no justifiable reason why student loans should be treated unlike any other type of debt in America.  Next, we must provide a right to borrowers to refinance their loans to take advantage of historically low interest rates – a move that would undoubtedly spur economic growth by putting more money into the hands of people who will spend it on ailing sectors of the economy.  http://www.StudentDebtCrisis.org

Finally, we must invest in our own people by implementing a fair and equitable loan forgiveness program, such as the one my organization, StudentDebtCrisis.org helped craft and which was introduced in the House of Representatives by Rep. Karen Bass (D-CA) – H.R. 1330, The Student Loan Fairness Act, which would allow borrowers to pay 10 percent of their discretionary income for a period of 10 years, after which, the remaining amount would be forgiven.

This would be a meaningful, fair and sensible step to help millions of people, both young and old, get back on firm financial footing. Contact your elected reps and implore them to co-sponsor and vote “yes” on the Student Loan Fairness Act of 2013.

Guest Post: Examine Student Loan Proposals as Rates Set to Double

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Originally posted by Isaac Bowers of Equal Justice Works in U.S. News & World Report.

In a deja vu moment, the interest rates on subsidized Federal Direct loans are set to double on July 1 and Congress is scrambling to find a fix.

The Student Loan Ranger thinks there will be one – given the bipartisan recognition that it’s an important issue – but the details will matter greatly for student loan borrowers. Here are the ins and outs of some of the proposals.

The president’s proposed 2014 budget is a mixed bag for borrowers. It provides a rate that would be fixed for the life of the loan and determined at the beginning of each academic year by adding the 10-year Treasury note rate plus 0.93 percent for Federal Direct subsidized loans, 2.93 percentage points for unsubsidized Federal Direct loans and 3.93 percentage points for PLUS loans.

This would result in affordable rates for borrowers in the near future, but is likely to lead to much higher rates later. The budget request eliminates the cap that has always existed on student loan interest rates – and income-driven repayment plans are not a substitute for a cap – and does not provide a way for borrowers to consolidate their loans at lower rates if market conditions change.

The House has already passed the Smarter Solutions for Students Act, H.R. 1911 sponsored by Rep. John Kline, R-Minn. It features a variable rate that is calculated annually by taking the 10-year Treasury note rate and adding an additional 2.5 percent for both subsidized and unsubsidized Federal Direct loans and 4.5 percent for PLUS loans.

Those are high rates, especially for graduate and professional students and parents. The legislation does include interest rate caps of 8.5 percent for Stafford loans and 10.5 percent for PLUS loans, but those compare unfavorably to the current fixed rates of 3.4 percent for subsidized Federal Direct loans, 6.8 percent for unsubsidized Federal Direct loans and 7.9 percent for PLUS loans. In both the short and long term, this bill would probably prove deleterious to student loan borrowers.

The Senate counterpart to the Smarter Solutions for Students Act is the Comprehensive Student Loan Protection Act, S.B. 682, sponsored by Oklahoma Republican Sen. Thomas Coburn. That bill determines its variable rate by adding 3 percent to the 10-year Treasury note rate to all Federal Direct loans and does not have an interest rate cap. Despite the comparatively low rate it would set for PLUS loans, this is not a good plan for most borrowers and is unlikely to go anywhere in a Democratic Senate.

Also highly unlikely to go anywhere is the Bank on Students Loan Fairness Act, S.B. 897, sponsored by Sen. Elizabeth Warren, D-Mass., which ties subsidized Direct loan rates to the very low rates the federal government provides to banks through the discount window. As it was probably designed to do, it has drawn further attention to the issue of high student loan interest rates.

Student loan geeks should pay attention to the Responsible Student Loan Solutions Act (S.B. 909) sponsored by Sens. Jack Reed, D-R.I. and Dick Durbin, D-Ill. This is more comprehensive legislation that sets Federal Direct loan interest rates annually at the rate of the 91-day Treasury bills, plus a percentage to be determined by the secretary of the Department of Education.

Under this plan, the exact interest rates for each type of loan could – and probably would – vary, but they could not be set to bring in more than the total cost of administering the Federal Direct loan program and borrower benefits and would have to result in the program being revenue neutral for the next year.

In addition, the rates on subsidized and unsubsidized Federal Direct loans would be capped at 6.8 percent and the rates of PLUS and consolidation loans would be capped at 8.25 percent.

Last but not least, previously issued FFEL and Direct Stafford and PLUS loans could be refinanced to take advantage of these new rates.

Something akin to the short-term fix proposed by the Student Loan Affordability Act (S.B. 953) is most likely to pass. Sponsored by Sens. Tom Harkin (D-Iowa), Harry Reid (D-Nev.) and Jack Reed (D-R.I.), it simply extends current student loan interest rates for two years, leaving the rate of Direct subsidized loans at 3.4 percent.

That would give Congress time to work “on a long-term solution to slow the rapid accumulation of student-loan debt.” It is probably safe to ignore the provisions paying for the bill by closing tax loopholes – they are unlikely to survive.

If you’re confused, the Student Loan Ranger suggests reading this summary over again – it may not make things much clearer, but should strengthen that feeling of “deja vu all over again.” And that’s the biggest takeaway.

Isaac Bowers is a senior program manager in the Communications and Outreach unit, responsible for Equal Justice Works‘s educational debt relief initiatives. An expert on educational debt relief, Bowers conducts monthly webinars for a wide range of audiences; advises employers, law schools, and professional organizations; and works with Congress and the Department of Education on federal legislation and regulations. Prior to joining Equal Justice Works, he was a fellow at Shute, Mihaly & Weinberger LLP in San Francisco. He received his J.D. from New York University School of Law.

Student Loans at HBCUs Getting Harder to Come By

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Last fall while registering students to vote in Ohio, I called a student who had filled out incomplete information on his voter registration form.  I was surprised to learn he was taking the semester off.  He had moved back to his hometown after his financial aid didn’t come through for the semester.  Unfortunately, what I had thought was an isolated incident was part of a bigger problem seen at many schools, particularly historically black colleges and universities (HBCUs).

The Department of Education changed the criteria for “credit worthiness” for applicants of Parent Plus Loans, resulting in an increased number of loan denials before the start of the fall 2012 semester.  These changes forced many students between a rock and a hard place.  Though students who don’t qualify for Parent PLUS loans are provided the option to receive additional loan funds, the cap on this increase doesn’t always make up the loss of the Parent Plus loan, preventing these students from being able to continue their education.

HBCUs have seen a disproportionate amount of students affected by this change.  Over 14,600 HBCU students were denied Parent PLUS loans this past fall.

The 5 hardest hit HBCUs are:

  • North Carolina Central University (NC): 609 students denied loans 
  • Howard University (DC): 607 students denied loans
  •  Florida A&M University (FL): 569 students denied loans
  • Prairie View A&M (TX): 528 students denied loans
  • Grambling State University (LA): 523 students denied loans

The Department of Education’s changes for Parent PLUS Loan standards has had a clear impact on black students and will severely impact HBCUs.

  • At Tuskegee University, approval for Parent PLUS loans plummeted from 55% to 23% this year past year.
  •  HBCUs have lost millions of dollars in revenue.  Hampton University has cited a loss of $6 million dollars.
  •  Morehouse College shut down during spring break with all members of faculty and staff on furlough in an effort to cut back costs for the college.

What do you think should be done to solve this problem?  How should this credit standard change? Please share your thoughts in the comment section.

New Unemployment Rate: Millennial Joblessness Jumps to 11.6%, and That’s Bad News If You’re Looking For Work

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By Rory O’Sullivan & Brian Burrell

Last month, the economy added 175,000 jobs while the national unemployment rate ticked up to 7.6% from 7.5% last month. For millennials ages 18 to 29, the unemployment rate rose from 11.1% in April 2013 to 11.6% in May 2013 (not seasonally adjusted), according to Generation Opportunity, wiping out the previous month’s gains. For younger workers ages 16 to 24, the unemployment rate rose .2 percentage points to 16.3% (seasonally adjusted).

This is bad news heading into June. Summer is a time when many younger adults get their first jobs. Early work experience is vital not just for earning a little spending money, but also for building a successful career down the road. Moreover, the country as a whole benefits from higher individual wages because it means more taxes paid and less reliance on public benefits.

However, the dismal youth job market continues to deny our generation essential opportunities – and teens are among the hardest hit. Since the start of the recession in 2008, teen unemployment has remained well over 20%, and it’s not looking good going into summer this year. Right now, 16 to 19 year olds face a 24.1% unemployment rate. Worse still, this figure only takes into account teens who are looking for jobs, ignoring discouraged teens who have stopped looking for work entirely. The true teen jobless rate is much higher. Rampant teen unemployment threatens serious long-term consequences for the future of the country.

The Economic Policy Institute recently took a look at how teen unemployment affects communities across the country. See how your state stacks up by visiting their interactive map.

If you want to do something about the problem, come join us at Young Invincibles. We’re working with job training programs across the country to educate people about the ongoing youth employment crisis and the solutions available to solve it.

Living Life 110% and Getting Covered

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By Katherine Schaller

When I tell people I work at Young Invincibles and explain to them what we do, they’re often confused. “If you’re invincible, why do you need health insurance?” is a popular question people ask me.  Well, if you’re a kick ass young person, you need to realize that you can’t predict the future and you should get covered.

Take the example of the Washington Nationals’ Washington Nationals’ outfielder Bryce Harper. He’s young- only 20 years old, and despite being a newbie (it’s his second year in the major leagues) he’s doing great so far. However, he’s now spending sometime in rehab after playing with an array of health issues- a stomach bug, injuries from bashing into the right field wall, even a bad ingrown toenail (TMI? I said it was bad…).

Don’t let your health stop you… get covered.
Photo by Reed Saxon – AP.

You may not be a 20 year-old playing professional sports, but you might be a 19 year-old breaking her ankle playing soccer with her friends.

1) Accidents happen. You might be a 25 year-old getting into a car accident, or a 31 year-old slipping on some black ice… you get the idea. We’re all breakable, and you need to be prepared.

2) If something happens, it could be costly.
Harper makes millions of dollars, but most of us don’t. Let’s be realistic: if we get in an accident or find out we need a new medication, it could cost an arm and a leg. The smart thing to do is to get covered before anything goes wrong.

3) Take care of yourself!
Look, I’m a Nats fan, and of course I don’t want to change how hard Bryce Harper plays the game; but I do want him to be able to keep playing the game for years to come. Bryce has coaches, trainers, and team doctors to take care of him, and to at least try to stop him from playing when he’s about to throw up. You may not have a team behind you, but you still need to take care of yourself, with preventive care like screenings, vaccines, and counseling. That way, you can keep working hard and playing hard for years to come.

Check out YI’s mobile app to learn more about your health insurance options.

Did we miss any points about why young people need to get covered?  Please leave comments below with your thoughts.

$51 billion: From Our Wallets to Yours

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By Jennifer Wang

This past February, the Congressional Budget Office (CBO) projected that the federal government would make roughly $36 billion off of student loans in 2013. When they pulled back out their calculators, they found that they were off by a few billion. If rates stay the same, they found that the government would make $51 billion off of student loans.

Let’s put this $51 billion dollar figure in perspective. For instance, Exxon Mobil is the most profitable corporation in the United States. Last year, Exxon Mobil made roughly $45 billion. In other words, the federal government’s student loan program is more profitable than many of our richest corporations. The interest alone that students pay on their loans to the federal government equals the combined net income of the four largest U.S. Banks: JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo. And over the last five years, the federal government has made roughly $120 billion in profit off of student loan borrowers. Why? A combination of low interest rates in the market, high interest rates for student borrowers, and aggressive practices when struggling borrowers default or simply cannot pay (think wage garnishment).

To make matters worse, student debtors are drowning deeper in debt. Student debt in this country just surpassed the $1 trillion mark. That means that there’s more student debt in this country than any other type of household debt, and mortgage debt is the only debt that beats out student loan debt in the U.S.

Students are struggling with the high cost of a college education. Tuition is skyrocketing, and interest rates could also skyrocket in the next few years if lawmakers refuse to come together to keep costs low.

We can’t let that happen.  If you’re in DC, join us on Capitol Hill for Student Debt Day on June 5th from 8am to noon. You can register here – hope to see you there!